During Question Time, Mr Morrison told Parliament he had been in contact with Indonesian President Joko Widodo in the last day to discuss his position, as had the two foreign ministers.

"This is a regular part of our management of these foreign affairs relationships and I am pleased to be able to explain very clearly the nature of the announcements I have made today [Tuesday] and I have been very pleased with the response that [we] have received from President Joko Widodo and we'll continue to work closely and cooperatively with our allies and with our partners all around the world on these issues," Mr Morrison said.

The trade deal has been eight years in the making and should benefit Australian grain growers, with Indonesia agreeing to import 500,000 tonnes of grain tariff free.

Mr Morrison said in August negotiators had also secured lower tariffs, or greater access, on live cattle, dairy and horticulture.

The agreement should also benefit the Australian education sector, with universities and vocational training providers being given the green light to set up shop in Indonesia.

Indonesia wants greater access for Indonesians to work in Australia as well as support for its crude palm oil industry.

Mohamed Khairat, Egypt's ambassador to Australia, said representatives from 13 Arab countries met in Canberra on Tuesday, and would be sending a letter to Senator Payne, voicing their concern about Mr Morrison's comments.

"Any decision like that might damage the peace process … this will have very negative implications on the relations between Australia and not only Arab countries but many other [Islamic countries] as well," Mr Khairat said.